Analysts say gold price plunge to continue   

ECNS — Analysts predict that the gold price plunge in China caused by a possible early Fed QE exit may continue, as gold prices took another nosedive on Thursday.

Following a temporary and slight rebound, international gold prices again tumbled to $1,400 per ounce on April 16 and even as low as $1,368 per ounce. As a result, many Chinese housewife-investors got hurt by the plunge.

Zhang Lei, a chief analyst at the Beijing Gold Exchange Co, said the ongoing gold plunge is caused by a possible QE exit of the Fed. Also, as stock markets in the US and Europe soar, gold investors chose to exit the gold market and enter the stock markets, further pushing down gold prices.

On May 10, the Federal Reserve hinted that it had already mapped out a possible QE exit plan for winding down its bond-buying program, which was meant to spur the economy. However, the timing for starting measures is still being debated.

Meanwhile, the US dollar index has become stronger. The once-bullish gold market may come to an end as stronger dollar curbs demand the metal as an alternative.

Gold investors should refrain from going into massive buying mode when prices tumble to avoid possible losses in the future, Zhang suggested, adding that the price fluctuation is not likely to have a big impact on the purchase of gold jewelry, especially for medium and long-term investors.

But for short-term investors, it is advisable to do risk management and avoid too frequent transactions, Zhang said.

Market analysts suggested that investors should follow closely the QE exit plan by the Fed： "When the dollar gets strong, gold appears to go down, and vice versa."